In today’s world of garbage and global warming, being environmentally friendly and green is obviously important, but most people inadvertently draw the line when it comes to finances. They may take sustainable action in 90% of their daily actions, but they don’t put their money where their mouth is. Thankfully, there are plenty of options for doing this.
What is sustainable investing?
Sustainable investing is essentially the practice of investing in companies, stocks and schemes that have a positive impact on the environment and society. This typically includes green energy investments, such as solar or wind, but is not limited to these types of companies.
“A sustainable investment strategy is any investment method that considers the impact of the investment in addition to the financial return,” Investor Alana Benson writes. “Sustainable investment strategies can really change: for one, this could mean putting a certain amount of money into ESG funds at a certain cadence (e.g. monthly). On the other hand, it could mean researching Every company they plan to invest in ensures that the mission of those companies aligns with the values of their investors.”
In other words, just like traditional investing, every sustainable investment strategy is unique. They may all have the same basic ethos, but execution and results vary from portfolio to portfolio.
4 Tips for Sustainable Investing
Do you want to get involved in sustainable investing? Here are some different tips, techniques, and best practices to help you head in the right direction:
1. Try ESG funds
If you want to continue investing in stocks and funds, you will want to turn to ESG funds that focus on sustainability.
as Robo explains“An ESG fund is a portfolio of stocks and/or bonds that has incorporated environmental, social and governance factors into the investment process. This means that the stocks and bonds included in the fund have passed the sustainability of a company or government in terms of its ESG criteria rigorous testing.”
Interestingly, research shows that ESG funds actually outperform traditional funds most of the time. They also experienced lower volatility. This is especially true in depressed markets, possibly because of their superior risk management infrastructure.
2. Align your investments with the right partners
Let’s say you’ve invested in your own private investments, such as rental properties. How can this investment be made more sustainable?
One option is to partner with companies that prioritize sustainability. For example, some property management companies make sustainability a priority.
As explained by Crown Luxury“We focus on projects with sustainable and green building techniques, and we do our analysis in the context of the building life cycle, not at the start of building construction.”
Small details like these can help you feel better about your entire portfolio.
3. Exercise your proxy voting rights
When you are a shareholder of a company, you can help the company make decisions by exercising what is known as a “proxy vote.” Most investors ignore this right, but if enough people feel strongly about an issue, they can actually change the status quo. This happened recently with palm oil.
Palm oil is used everywhere, but thanks to propaganda on behalf of shareholders during proxy voting, investors ensure that deforestation is reduced during palm oil harvesting and production in Southeast Asia. This results in less pollution and less greenhouse gases.
4. Stay away from toxic investments
In addition to investing in the right cause, you should do your best to decouple your portfolio from harmful investments. For example, if you know that one of your funds is heavily invested in companies that engage in hostile overseas relationships or unsustainable business practices, you should swap those funds out and exchange them for something more in line with your values. It’s not easy — especially if the fund is doing well — but it’s necessary.
put money where your mouth is
If you’re a true believer in sustainable living, it’s important that you don’t just talk about it. Likewise, you can’t arbitrarily pick and choose which areas of your life are convenient for prioritizing sustainability. Your wallet needs to follow suit.
As this article shows, there are many opportunities to invest in sustainable causes, companies and initiatives. Hope you have some ideas that you can put into practice in the coming weeks and months.
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